BPIF survey shows printers pragmatic over Q1 2019

The latest Printing Outlook survey from the BPIF shows 53% of printers increased output levels in the fourth quarter of 2018. 34% held output steady whilst 13% saw a decline. The resulting balance (the difference between the ups and the downs) was +40; a significant add-on to the boost that started in Q3 and marginally above the Q4 forecast of +37. However, the BPIF said numerous comments from survey respondents referred to turmoil, uncertainty and unpredictability, and that whilst a number of companies have traded well there are common perceptions that they are “bucking the trend”. Fewer printers are expecting to see their activity levels increase in Q1.

Output growth nevertheless, is forecast to increase 34% of companies. 45% of respondents predict that they will be able to hold output levels steady in Q1, a further 21% expect output levels to fall. That leaves a forecasted balance of +13 for the volume of output in Q1 - similar to last year’s Q1 forecast, which was proven to be overly negative. Competitors pricing below cost has returned to become the most voiced business concern. With 60% of respondents selecting it as one of their top three business concerns; it has just kept its notoriety ahead of Brexit, which has continued to climb the rankings. Brexit has now been selected by 58% of respondents (up from 44% last quarter). Paper and board prices complete the top three, with 53% of respondents selecting it. Access to skilled labour, energy costs and poor output price levels were all further back in the ranking. Investment intentions for plant and machinery in 2019 have picked-up following a period of curtailed expenditure plans. Training and retraining plans have also been boosted, whilst intentions for product and process innovation remain positive. Most companies (91%) plan to make some investment in plant and machinery in the year ahead. Almost one-third (30%) intend to maintain current investment levels and 14% expect to reduce investment to a lower level. However, that leaves almost half (47%) that anticipate higher levels of investment directed towards plant and machinery in 2019. The resulting balance (+33 – the blue line in the investment chart, which is read from the right-hand axis) is above the level recorded in each of the last two years. Printers are continuing to report that they are under pressure to accept longer payment terms by some customers. 48% of respondents reported that they had been obliged to accept longer payment terms from customers in 2018 in order to help retain or secure business. Of these, 12% were for terms up to 60 days and 64% for up to 90 days. 22% felt obliged to accept payment terms of up to 120 days (a significant increase from 7% last year) and a further 2% in excess of 120 days. BPIF research manager Kyle Jardine said: “Many respondent comments refer to sheer frustration that the uncertainty surrounding Brexit has still not been removed, a loss of faith in our politicians and concern over ‘no deal’ becoming a reality by default. However, there were still numerous more positive comments expressing a desire to just get it done and that, after a period of adjustment, it will be better for UK businesses to leave the EU. ” Charles Jarrold, BPIF chief executive, added: “The printing industry has become adept at dealing with change - it has had to in order to survive. It is welcoming to see strengthening investment intentions as a willingness to invest is a vital component for improving the ability to change. “However, it is a concern to see a surge in late payments and added pressure on printers to accept extended payment terms - which can only add increased pressure on cashflow and a higher risk of payment default. I urge all companies to keep a really close eye on outstanding debts and maintaining their cashflow.”